After thorough analysis of the financial landscape, I strongly
believe that giant banks need to be broken up NOW and before it is too
late.
My rationale?
1. Giant banks are the major reason why sovereign debt has become a major crisis today. In fact, the Bank for International Settlements (BIS) recently pointed out in a recent report that the giant bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened. In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default. Given that Greece, Ireland, Portugal, Spain, Italy and many other European countries - as well as the U.S. and Japan - are facing serious debt crises, we are no longer wealthy enough to keep bailing out the bloated banks....and since big banks hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives, it is clear that derivatives will never be reined in until the mega-banks are broken up................... http://goo.gl/vCHpn
My rationale?
1. Giant banks are the major reason why sovereign debt has become a major crisis today. In fact, the Bank for International Settlements (BIS) recently pointed out in a recent report that the giant bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened. In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default. Given that Greece, Ireland, Portugal, Spain, Italy and many other European countries - as well as the U.S. and Japan - are facing serious debt crises, we are no longer wealthy enough to keep bailing out the bloated banks....and since big banks hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives, it is clear that derivatives will never be reined in until the mega-banks are broken up................... http://goo.gl/vCHpn
No comments:
Post a Comment